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Big Blue Goes for the Big Win

IBM's director of R&D is shifting the tech giant's focusand making a few enormous bets

It's a snowy February day at IBM's office in Yorktown Heights, N.Y., and John E. Kelly III drops by a cramped conference room to talk about his plans for IBM Research. The organization is already considered one of the world's best corporate research labs. Yet Kelly, a 27-year IBM veteran who took over as research director in July, is planning surprisingly dramatic changes. "We have to do bolder things, bigger things," he says, speaking about his plans publicly for the first time. "If we don't fail a third of the time, we're not stretching enough. On the other hand, when we win, we need to win big."

What does Kelly have in mind? For starters, he's focusing on four top research priorities, rather than spreading investments too thin. The four bets are enormous, though. Each of the projects will get $100 million over the next two to three years, in hopes of generating at least $1 billion, each, in new revenue. The projects: inventing a successor to today's semiconductor, designing computers that process data much more efficiently, using math to solve complex business problems, and building massive clusters of computers that operate like a single machine—an approach called "cloud" computing. Central to the effort will be even more emphasis on basic scientific research, such as physics, chemistry, and math.